How They Benefit Homebuyers

The best deals in the market are on fixer-uppers, homes in need of some kind of repair, remodel or renovation.

Being a loan program insured by the FHA, the 203(k) renovation program allows approved lenders to offer homebuyers many benefits not available under conventional lending standards. Those benefits include:

  • Only a 3.5% down payment, which can be gifted by family members
  • More flexible qualification requirements, allowing buyers with less than perfect credit to purchase a home at competitive rates
  • A single loan for the purchase and improvement of the home means only one loan application and one set of closing costs – saving both time and money
  • Using the program for either a purchase or refinance along with renovation costs
  • Having a choice between a 15- or 30-year loan
  • Having the option of either a variable or fixed interest rate
  • FHA loans that are assumable with no prepayment penalties
  • Selecting an FHA Energy Efficient Mortgage (EEM) that allows the borrower to qualify for a larger mortgage in order to add improvements that will lower utility expenses
  • Being able to make a variety of improvements from the most simple to the very complex
  • Renovation costs that are wrapped into the mortgage, allowing the borrower to pay for the improvements over time at a much lower interest rate than conventional alternatives
  • Buying a home that is in less than “perfect” condition, taking advantage of discounted prices available on foreclosures or other homes on the market that are in need of repair or remodeling
  • Not having to pay for a previous owner’s improvements; 203(k) allows the buyer to renovate the home adding the features, colors, styles, etc. that suit their tastes and needs
  • The potential for a buyer to purchase more home for the money in a more desirable location under the program